Why Form an LLC

 


Physical Possession: If you desire to have the precious metals in your physical possession, then an LLC is needed along with the Self-Directed IRA. The right LLC with the correct language provides part of the necessary process to enable you to do so. Be advised that this is just one of the pieces needed. The custodian must allow physical possession of your metals. In addition, purchase the correct coins to fulfill the IRA codes and requirements as well as Department of Labor (DOL) rules. Note that not all custodians will allow you to have physical possession of your precious metals. Some require storage of metals in a depository of their choice. However, using the right kind of IRA, gold and silver coins, and trustee, you can take physical possession of the metals. This is a huge benefit over having your gold and silver stored in a depository or bank safety deposit box. It is the combination of the Self-directed IRA and the special LLC that yields the benefits of physical possession. For more information on this subject refer to the Resources tab and look under FAQ (Frequently Asked Questions).

More Power: An LLC (Limited Liability Company) is a business entity representing a cross between a partnership and corporation. The LLC provides the liability protection of a corporation while it is taxed as a partnership. Therefore the LLC will not pay the taxes but the owners of the LLC will pay the taxes. At the manager’s discretion the funds may remain in the LLC while the tax liability passes on to the owners of the LLC. The sole owner of your LLC is your IRA and you are the manager unless you appoint someone else. This strategy results in no taxes owed on the profits generated in the LLC unless you elect a distribution or use leverage in buying real estate. Note that if the LLC is improperly drafted, the entire LLC IRA may be disqualified and taxed.

Asset Protection: In some states, the IRA may be subject to judgments and creditors. An LLC offers asset protection to those assets held inside the LLC. The only asset in the IRA is the ownership of the LLC. The assets in the LLC are protected by all the IRA laws and also by the LLC laws and statues. Under the law, your IRA and LLC are viewed as separate legal entities. Your IRA funds are in an LLC bank account, stocks are held in a LLC brokerage account and any other assets titled in the name of the LLC. The owner of the LLC is the IRA and you are the manager of the LLC. Because your IRA and LLC are seen as separate legal entities, there is great asset protection to those assets held inside the LLC. The only asset in the IRA is the LLC. Under most state laws, should someone win a lawsuit against the owner of an LLC, he or she cannot take the assets from the LLC owner that belongs to your IRA. They could receive a charging order against the LLC. A charging order does not give full rights over the LLC since you, as the IRA owner, manage the LLC and investments. They would have rights to the distributions. However since you are the manager, you make the decisions to distribute. Talk to your attorney regarding an LLC.
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